“We have been in Sri Lanka for nearly 114 years and we are confident that you can overcome your current challenges. In the meantime our business here is growing….
in a few weeks time we will be finalizing a 100 million dollar syndicated loan for Bank of Ceylon,†Smith told businessmen in Colombo.
The loan is believed to carry tenures ranging from two to three years, with state-run Bank of Ceylon due to go on a road show in the coming days, to raise funds from markets in Singapore and Hong Kong.
The pricing of the issue, will be finalized once the road show is completed.
The bank usually re-lends its dollars to the government, and analysts expect the proceeds of this loan to also go to the Treasury.
Sources close to the deal declined to say the exact use of the funds, but it is believed that most, or all of it, would go to the government.
Being Sri Lanka’s largest commercial bank, Bank of Ceylon also finances Ceylon Petroleum Corporation.
Last year, Bank of Ceylon raised 130 million dollars via a 2-year syndicated loan.
“As a show of commitment to our business here, our head office last year invested 30 million dollars to increase the capital of our Sri Lankan office, which is well in excess of the enhanced minimum capital requirements currently imposed by Sri Lanka’s Central Bank,†Smith said.
Operating out of 11 branches, HSBC’s local office is also the largest foreign bank in the island, commanding about 6-percent of the total banking system assets.
The bank's core business lies in retail and corporate banking. These business lines, along with Treasury operations, accounted for 37.
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1 percent, 45.2 percent and 16.1 percent of the bank's net operating income, respectively in FY05, according to the rating agency, Fitch Ratings, who assigned a ‘AAA (lka)’ for the bank’s local operations recently.